Cormedix Inc. — Q2 2020 Form 10-Q
Reporting period: Three and six months ended June 30, 2020; filed August 10, 2020. CorMedix is a biopharmaceutical company developing Defencath, a catheter-lock solution intended to prevent catheter-related bloodstream infections, with limited Neutrolin sales outside the U.S.
Financial results and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $16,000 | $35,000 | $90,000 | $199,000 |
| Gross profit (loss) | $(3,000) | $14,000 | $23,000 | $(49,000) |
| Research and development | $5.69 million | $2.98 million | $8.16 million | $5.85 million |
| Selling, general and administrative | $3.23 million | $2.57 million | $6.40 million | $4.56 million |
| Loss from operations | $(8.92) million | $(5.54) million | $(14.53) million | $(10.46) million |
| Net loss | $(3.78) million | $(0.70) million | $(9.34) million | $(5.86) million |
| Net loss per share | $(0.14) | $(0.03) | $(0.36) | $(0.25) |
- Q2 revenue fell 53% and first-half revenue fell 55%, principally because Saudi Arabia sales were suspended after the local product registration expired.
- R&D and SG&A rose substantially. Higher R&D included $3.4 million for Defencath manufacturing materials ahead of potential approval; clinical-trial spending declined as LOCK-IT-100 was completed. SG&A increases included personnel, insurance, marketing research and legal costs.
- Net loss includes a $5.17 million income-tax benefit associated with selling New Jersey net operating losses. The company also received approximately $5.2 million net cash from that sale.
- Cash and cash equivalents were $16.49 million and short-term investments were $5.95 million at June 30, for $22.44 million combined, excluding $0.18 million restricted cash. Total current liabilities were $5.71 million; total liabilities were $5.72 million. The balance sheet reports no material funded debt; the prior convertible note was no longer outstanding.
- First-half operating cash use was $8.72 million, versus $7.20 million in 2019. Investing activities provided $6.03 million, primarily reflecting maturities of short-term investments; financing activities provided $2.83 million, mainly ATM stock sales and warrant exercises.
- Accumulated deficit was $204.8 million. Common shares outstanding were 26.13 million at June 30.
Business developments, outlook and risks
- CorMedix completed all modules of the Defencath U.S. NDA submission on July 8, 2020 and requested FDA Priority Review; the filing does not establish that Priority Review was granted or that the NDA was accepted for filing. Management cited a potential marketing approval and launch by mid-2021, subject to regulatory review and other conditions.
- LOCK-IT-100’s final analysis reported a 71% reduction in catheter-related bloodstream infections versus heparin across 41 cases, statistically significant at p=0.0006, with a reported good safety profile. The FDA’s acceptance of one pivotal trial remains an approval risk.
- Management estimated that available cash and investments, including the subsequent July financing, would fund operations for at least 12 months after the report filing date. It warned that additional capital may be needed for launch and continued operations; financing may be dilutive or unavailable on acceptable terms.
- On July 30, 2020, after quarter-end, the company sold 5,111,110 common shares at $4.50 per share for approximately $23.0 million gross proceeds. This increased liquidity but diluted existing shareholders.
- COVID-19 could disrupt FDA review and manufacturing-site inspections, supply chains, vendors, hiring and other development or launch activities. Management reported no FDA-notified review delay as of the filing.
- CorMedix faces German disputes with TauroPharm: the European patent had been revoked by the EPO and was under appeal; the company withdrew its utility-model complaint in April 2020; and its separate unfair-competition complaint had been dismissed at trial and was being pursued on appeal. Outcomes and potential costs remain uncertain.
- Other risks include the expired Saudi registration, dependence on external financing, the need to secure regulatory approval and manufacturing readiness, and uncertainty about future reimbursement. Management’s expectation of potential Medicare reimbursement, including TDAPA, is not assured.
Most important facts for investors to verify
- FDA filing acceptance, review classification and review timing for the Defencath NDA, including inspection requirements and any COVID-19-related delays.
- Whether the expected mid-2021 launch remains achievable and what commercial infrastructure and manufacturing funding it will require.
- Cash runway after the July offering, ongoing operating cash burn and any further equity or debt financing needs and dilution.
- Progress on reimbursement and coverage decisions, including whether Defencath qualifies for TDAPA.
- Resolution of the TauroPharm litigation and the Saudi registration renewal, along with their financial and commercial implications.